self employed health insurance and the premium tax credit

[RDL]

When ProSeries calculates the self-employed health insurance deduction, it limits it to an amount that is less than the premiums paid which were equal to the repayment of the premium tax credit. The repayment of the premium tax credit was $6,823 but the SE health insurance deduction allowed was only $2,700. This seems incorrect although I know the calculation is very complex. The taxpayers were above 400% of the federal poverty line.

[TaxGuyBill]

How far over 400%?

Try this:  UN-link the 1095-A/8962 from the Schedule C business.  Enter the total insurance cost (usually the total on column A of the 1095-A) in the 'usual' spot on Schedule C.

Does that still result in the 8962 being over 400% and the full amount of Advance Credit being repaid?  If so, just keep it that way.

If that puts them under 400%, then it may get more complicated and I would need to know more details.

[RDL]

Thanks for your reply, Bill. The premium tax credit being repaid is reduced by the difference between the SLCSP for the year and the annual contribution amount. The taxpayer is over 400% of the federal poverty line in all cases. When the Marketplace statement is not linked to the Schedule C and the repayment of the premium tax credit is shown as SE health insurance on Schedule C, it changes the amount of the modified AGI on Form 8962 which then changes the amount of the premium tax credit that must be repaid, a Catch 22 situation. I wish ProSeries had a better explanation of its calculation of the SE health insurance deduction in a case like this.   

[TaxGuyBill]

Oh, I forgot about the 2021 rules that can still allow the credit when over 400%.

And as you see, Intuit screwed things up for the SEHI deduction in those cases.

Doing the math can be horrendous, so I would recommend the guess-and-check method. 

1. Keep the 1095-A/8962 linked to Schedule C and let the program do the calculations..
2. Look at the amount of the PTC repayment and figure out what the SEHI deduction SHOULD be based on that (column A of the 1095-A, minus the Advance credit in column C, plus the repayment shown on the 8962).
3. Look at what ProSeries is showing for the SEHI deduction, and figure out the amount it is 'missing'.  Enter that 'missing' amount in the 'usual' spot on Schedule C.
4. As you pointed out, that will then change the calculations.  Repeat the above steps (which results in you gradually changing the amount in the 'usual' spot on Schedule C) until it is fine-tuned to get a reasonable answer, and then keep it that way.

Even if the software was doing things correctly, the IRS calculations for the Iterative method don't always work out cleanly, so even doing the guess-and-check method may not always come out super cleanly.